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Econometric analysis of real exchange rate shocks and real growth of the tourism sector in South Africa

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  • Paul-Francois Muzindutsi
  • Jean Claude Manaliyo

Abstract

The aim of this study was to analyse the interactions between real exchange rate and real income from the tourism sector in South Africa. The vector autoregressive model (VAR) with Johansen multivariate cointegration approach was used to analyse monthly time series from January 2007 to December 2015. This study found a negative long-run relationship between the real exchange rate and real tourism revenue (LTR) in South Africa, where the depreciation of the local currency is associated with an increase in the LTR. Short-run results revealed that LTR is affected by short-run fluctuations in the real exchange rate; while Granger causality test showed that the real exchange rate Granger causes LTR. This study concluded that the weakening of the local currency, against major foreign currencies, seems to be good news for the South African tourism sector.

Suggested Citation

  • Paul-Francois Muzindutsi & Jean Claude Manaliyo, 2018. "Econometric analysis of real exchange rate shocks and real growth of the tourism sector in South Africa," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 11(3), pages 205-214.
    • Handle: RePEc:ids:ijmefi:v:11:y:2018:i:3:p:205-214
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    Cited by:

    1. Fu, Guomin & Zhu, Sijia, 2023. "Innovation, financial risk and natural resources for sustainable development: Fresh evidence from BRICS economies," Resources Policy, Elsevier, vol. 80(C).

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